Alan Greenspan Replacement - The Best Choice

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Davidlynch2000: Simple questions: What model are you using?


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November 3, 2005

SouthAmerica: On this perfect model world of yours – what your model is predicting for the value of the US dollar during the year 2006?

You know my prediction – and my prediction depends on what Ben Bernanske does in the first half of 2006 related to increasing the interest rates here in the US. He has to increase the rate to at least to 5 percent before he can stop this rate increasing cycle. Depending on various factors he might have to increase even further.

You know my prediction. (And I don’t know how much appetite the Central Bankers of Asia still have for investments in US dollar.)

Stop being a pain in ass, and record right here on this website your prediction based on “your models” for the value of the US dollar in 2006. If your models are any good we can test it - if you will accept this challenge.

We will check notes by the end of 2006 and we will see who will be right.


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SouthAmerica: Just look at how crazy this perfect financial market of yours is getting.

This is just an over simplification of the entire mess but….

The New York Stock Exchange lists 2,800 companies. The Nasdaq lists 3,300 companies. For a total of 6,100 public traded companies that other mutual funds and hedge funds can invest on.

There are 13,000 Mutual Funds and 11,362 Hedge Funds. For an estimated 24,362 investment types of companies chasing some kind of returns on their investments.

Consider the following:

Out of the 11,362 Hedge Funds – an industry not as regulated as the Mutual Funds industry – there are probably 10 percent of these funds or even more that are like a minefield hiding losses and manipulating the figures until they blow up like Refco. There are many Refco’s out there waiting to go off.

You can bet that there are many incompetent people among the people managing all these companies.

And should not be a surprise to you that there are a lot of greedy, crooks and unethical people among the people running these companies. Just look at the scandals we had in the last ten years and many of them involved billions of US dollars losses to investors.

Today the Hedge Fund industry is like a minefield with a number of time bombs ready and waiting to blow out at any time.

And today many of the major American companies traded on the major stock exchanges – the way these companies are managed is nothing to write home about.


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1) The New York Stock Exchange:

NYSE-listed companies are among the world’s best. They range from “blue-chip” companies, to world-leaders in technology, to young, high-growth enterprises. They meet and adhere to the most stringent listing and governance requirements.

New listings at the Exchange include transfers from other U.S. markets, initial public offerings, and cross-listing by non-U.S. companies listed on other global exchanges.

In November 2005 the NYSE lists close to 2,800 companies.


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2) Nasdaq:

NASDAQ is the largest U.S. electronic stock market. With approximately 3,300 companies, it lists more companies and, on average, trades more shares per day than any other U.S. market. It is home to category-defining companies that are leaders across all areas of business including technology, retail, communications, financial services, transportation, media and biotechnology. NASDAQ is the primary market for trading NASDAQ-listed stocks.


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3) Mutual Funds:

Today “Morningstar” provides information on more than 13,000 mutual funds.


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4) Hedge Funds:

The amount of money managed by funds that can be termed hedge funds passed the $1 trillion mark during 2004, according to the Alternative Fund Services Review.

In mid-2004, hedge funds were managing over $1.1 trillion dollars. The total number of funds has broken the 10,000 barrier, reaching the grand total of 11,362.


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Finally an answer! Sort of...

Quote from southamerica:

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Stop being a pain in ass, and record right here on this website your prediction based on “your models” for the value of the US dollar in 2006. If your models are any good we can test it - if you will accept this challenge.

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More...

My prediction is that phony economists who can't wrap their minds around any part of the complexities of the market, who get worked up when someone questions their bizarre market calls, and who can't develop any sort of quantitative model will be wrong on their dollar predictions in 2006.

I didn't make a call on the dollar (except that I was a little longterm bearish). I didn't state a trading range because I have no idea where it is going to go, and I have no conviction regarding my market call. You seem to have all the conviction in the world regarding your market call.

It is patently irresponsible to make those sorts of calls with no basis for them. You could put together a balance of payments model without too much work. A few additional variables that are generally accepted to effect the currency markets are sticky forward contracts, a form of portfolio theory based on relative interest rates, an index of technical indicators (each weighted to some degree), and some fundamental country statistics like GDP to debt levels and tax levels. Feel free to incorporate any or all of these variables into your model.

Spend 1-3 months putting together some sort of model that has a basis in reality, as opposed to your highly qualitative and suspect observations and then you'll be able to say things like, "If the deterministic portions of the currency markets that I attempted to model behave like they have in the past, we will be seeing a range of" whatever "in the dollar." If your variables are wrong or weighted incorrectly, you can then have a rational discussion about them.
Note: Your model will probably be wrong, because models are just models, but at least you wouldn't be repeating the same facts over and over again and acting like the only possible outcome of the facts you mention in your articles, is the conclusion you draw from them. It is not the only possible conclusion.

The reason economists make models is an attempt to approximate what will happen in the world. Your model can be very approximate and it can still be very correct.

Finally, like I said earlier, maybe this is a translation problem, but you come off as somewhat pretentious with your market calls because you say them so deterministically. But now you have answered two of my questions.

You have no quantitative facts to make your calls on, and you are just pulling numbers out of thin air. So the last question is, Where is your stop loss? At what level do you admit that you were completely wrong?
 
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“Greenspan Warns U.S. on Budget Deficits”
By JEANNINE AVERSA, AP Economics Writer
Associated Press – November 3, 2005


WASHINGTON - With just three months left before he leaves office, Federal Reserve Chairman Alan Greenspan raised a warning to Congress: The country could face "serious economic disruptions" if bloated budget deficits are not curbed.

The Fed chief's strong comments, made during an appearance Thursday before Congress' Joint Economic Committee, come after the government produced a $319 billion budget deficit this year — an improvement from the record amount of red ink registered in 2004 but still the third-highest deficit on record.

In the short term, costs related to rebuilding after the trio of devastating hurricanes will make it harder to improve the nation's balance sheets, he acknowledged. In the long term, a huge wave of retiring baby boomers will put massive strains on government resources, he said.

"There are no easy choices. Easy choices are long gone," said Greenspan, whose 18-plus year run at the Fed comes to an end on Jan. 31. Congress is working on separate packages of tax cuts and spending cuts.

Even as he sounded an alarm about the dangers that budget deficits pose to the country's long-term health, Greenspan struck a more positive note about the economy's current prospects after being jolted by the recent hurricanes.

Katrina, Rita and Wilma are likely to "exert a drag" on employment and production in the short term and may aggravate inflation pressures, Greenspan said. "But the economic fundamentals remain firm, and the U.S. economy appears to retain important forward momentum," Greenspan said in his most extensive remarks thus far on the impact of the storms.

The Fed is keeping a close eye on high energy prices to make sure they don't spark broader inflation.

"We are very firm in the notion that this country should not visit the 1970s again in the way of inflation," Greenspan said, referring to a period where the economy was rocked by skyrocketing prices.

On the budget front, Greenspan called on Congress to get the nation's fiscal house in order and bring the swollen deficits under control.

"Unless the situation is reversed, at some point, these budget trends will cause serious economic disruptions," he said.

Persistently large deficits will eventually push up interest rates, Greenspan said. Higher borrowing costs would weigh on the willingness of consumers and businesses to spend and invest and that could be a drag on economic growth, analysts say.

"I find it utterly inconceivable, frankly" that persistent budget deficits over the long run "will not have a significant impact on long-term interest rates," he said.

Greenspan repeated his call for lawmakers to restore caps on spending. And, he urged lawmakers to pay for any future tax cuts with either increases in other taxes or reductions in spending. Greenspan said he'd like to see the dividend tax cut extended — but only it it is paid for.

"Crafting a budget strategy that meets the nation's longer-run needs will become ever more difficult and costly the more we delay," he said.

The Fed chief also underscored his belief that benefits currently promised to the baby boom generation through Social Security and Medicare likely cannot be met and probably will have to be trimmed.

"We owe it to those who will retire over the next couple of decades to promise only what the government can deliver," Greenspan said.

Greenspan was questioned about the support he gave in 2001 to President Bush's successful drive to get Congress to pass sweeping tax cuts that totaled $1.3 billion over 10 years. Those tax cuts are blamed by Democrats for bringing back record deficits.

"Do you have any regret about the way you expressed yourself in 2001?" asked Rep. Carolyn Maloney, D-N.Y.
Given the facts known at the time, Greenspan said he would still support the tax cuts because of projections, which later proved wrong, that the federal government was facing huge surpluses.

The Fed chief's appearance on Capitol Hill comes two days after the central bank boosted a key interest rate up to its highest level in more than four years to thwart inflation.

Oil prices briefly shot up past $70 a barrel in late August, and gasoline prices topped $3 a gallon before moderating. But home heating costs are expected to be much higher this winter than a year ago.

"I think people are going to be quite surprised at their heating bills this winter," Greenspan said.

Many economists are predicting the Fed will bump up rates at its next session, on Dec. 13, as well as on Jan. 31, which will be Greenspan's last meeting. Some analysts also are calling for a rate increase on March 28, which would be the first presided over by Ben Bernanke, President Bush's choice to replace Greenspan.

Lawmakers hailed Greenspan's economic stewardship "You've done one heck of a job. And I think we're going to miss you a great deal," said Rep. Maurice Hinchey, D-N.Y.

"The nation is in your debt," said the committee's chairman, Rep. Jim Saxton, R-N.J.


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SouthAmerica: Reply to davidlynch2000

I made the following predictions in November of 2004.

My prediction about the rate of the US dollar against the Euro did not materialized during the last 12 months - because the decline of the US dollar took a break after the defeat of the European Union's Constitution. But I am sure that as soon as the dust settles the US dollar will continue its declining trend versus the Euro - and I am also sure that the US government will continue its reckless borrowing binge.

We will have plenty of major hurricanes in the coming years like Katrina and the US government will use it as one of the excuses to continue its borrowing ways.

And believe me you will see the US dollar rate of $1.50 to $1.60 to the Euro in no time.

It does not matter what is going on in the US economy in early 2006 - the Fed will need to keep raising interest rates at least to the 5 percent level and maybe even further to keep the US dollar from sinking like the Titanic.


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November 5, 2004

“Economic Forecast for the US Economy for the Year 2005 and Beyond.”
By: Ricardo C. Amaral


If you have been reading most of my articles, then you know that I am very pessimistic about the direction that the US economy is taking.

In my opinion we are heading for a worldwide depression, probably even worse than the depression of the 1930's. The US economy is heading south and it is picking up speed.

The Bush administration's policies are a sure bet for a new economic depression. I have no doubts about that. We have a very weak economic team running economic policy in the country today.

Here are my predictions for the year 2005 and beyond for the US economy:

1) The US dollar should decline further during the year 2005 at least to the range of:
US$ 1.50 - US$ 1.60 equal 1 Euro.

2) Gold should increase in price from the current $440 price to around to $ 500.

3) The stock market should decline in the next 3 to 4 years in the range from 30 to 50 percent from current levels. (There are many reasons for that decline to become reality.)


Market closings for November 5, 2004:

Dow Jones 10,388

Nasdaq 2,039

S&P 500 1,166


Market will trade in the following range in the next 3 to 4 years:

Dow Jones from 7,300 to 5,200

Nasdaq from 1,400 to 1,000

S&P 500 from 800 to 600


4) The real estate bubble will burst in the near future when interest rates starts rising to higher levels. Housing should lose in value from 25 to 40 percent depending where the real estate is located. (The actual price of real estate will decline in real terms, since inflation is very low)

5) To stabilize the US dollar decline, the US Federal Reserve will need to raise the Fed Funds rate to a level between 4 and 5 percent by the end of 2005. As the US Federal Reserve increases the Fed Funds rate at this fast rate, the US economy growth rate will decline accordingly; in turn helping the implosion process of the US economy.

6) Outsourcing American jobs to foreign lands will help the implosion process of the American economy. It is open season on American jobs, and millions of American jobs are leaving the US for cheaper labor places. Americans want equality, in terms of wages, equality is at the 50 cents per hour without company benefits. In the future, Americans will get what they are wishing for.

7) Companies of every size will transfer the responsibility of their pension plans to the US government. Most of the people now receiving pensions from these companies will receive a very large cut on their pension benefits when the pension responsibility is transferred to the US government: Pension Benefit Guaranty Corporation's (PBGC)

These large cuts in pension income will result in a reduction in spending by pensioners, and in another important negative trend to affect the US economy in the coming years. (We are talking about millions of retired people here in the US.)

It is pathetic to see a country such as the United States to decline economically so fast. But gross government mismanagement will do it every time.

Without taking in consideration the US government’s usual published misinformation, the real rate of unemployment in the United States should be in the range of 13 to 15 percent, not the fictitious number published every month by the Labor Department of around 5.6 percent. The unemployment rate will increase drastically in coming months and years, as the US economy continues to deteriorate on its race to the bottom.


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SouthAmerica...

I agree 100% with your line of thinking...


http://www.japantoday.com/e/?content=news&cat=8&id=354269


The Bush Admin seems to be doing everything in its power to make your viewpoints come true...

Greenspan knew full well what rescuing the 7 trillion dollar losses in the late 90s would mean in the future...as he was politically influenced as well...

The above article speaks well about how they feel about the Bush admin in Latin America...

Here's the way it is...

Two of my employees have families that work in the local US and Spanish textile plants...They work 6 day 10 hr days...They make approximately $300 per month....CAFTA is just going to create more of the same....

Because of lessor educational facilities and inherent ethnic issues ..there is no way it can be anything else...

The Americanized model is just not good for the rest of the world..Hey...Just read the above article...

Right now ..the IMF is stiff arming one of the countries...no CAFTA...no IMF..and it will create economic misery 100 fold....

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No one likes Bush and his policies...no one...if it were not for IMF needs...they would just assume he disappears...

Look...it is going to be incredibly difficult to nail Trust Acct Bush and Haliburton Cheney...as they will have the best lawyers in the world...and control of the press...If you do not think this is true...hey just look at how fast they tried to change the media this past week....

The Tax package also reeks of disaster...its influence on real estate alone will crush the US banking system...

Man...the US needs a change....fast.....this outfit screws up everything ...everything....

That's what you get when you country is run by money hungary cronies...but the US will become another New Orleans...

And by the way..."black bottom" in New Orleans makes Latin slums look like paradise...and CAFTA will increase the population in these slums 100 fold.....

Man what the US needs are common sense people in its government...not academics educated way beyond their intelligence....
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Killing lots of innocent children and their mothers is not the way to go after oil...and ruining millions of lives economically is not far behind...

If the Bush Cheney Rumsfeld disaster team are allowed to walk freely home...this would be a tragic day of injustice to the world....
 
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November 4, 2005

SouthAmerica: Reply to Libertad

Here are some articles regarding the two-day Summit of the American states in Mar Del Plata.

After this Summit Bush will stop in Brazil. The Brazilian people doesn't like George W. Bush, but the Brazilians will be polite during his visit anyway - even tough most Brazilians would like to kick his ass instead. (Brazilians are not anti-Americans – they are anti-Bush and his administration)


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“Bush Tries to Improve U.S. Image at Summit”
By NEDRA PICKLER, Associated Press Writer
Associated Press – November 4, 2005


MAR DEL PLATA, Argentina - President Bush on Friday worked to smooth the United States' troubled image in Latin America, commending Argentina's efforts to improve its damaged economy.

"The economy has changed in quite dramatic fashions thanks to the wise decisions you have made," Bush told Argentina President Nestor Kirchner.

…Bush spoke on the first day of the Summit of the Americas being attended by leaders and officials of 34 nations. Nearby, an estimated 10,000 demonstrators shouting "Get out Bush!" marched in the streets of this seaside resort, illustrating the skepticism that many South Americans have toward U.S.-led negotiations for a Free Trade Area of the Americas stretching from Alaska to Argentina.

…Chavez has joked about whether Bush is afraid of him and said he might sneak up and scare Bush at the summit. Chavez has said he would use the meeting as a stage to denounce the U.S. as a "capitalist, imperialist model" of democracy that exploits the economies of developing nations.
…Bush's trip comes as he faces the lowest job approval ratings of his presidency back home.

Demonstrators poured into Mar del Plata. Police with riot shields redoubled security, and navy ships patrolled offshore as helicopters clattered over the luxury hotel where leaders will meet.

"We're going to say 'No to Bush' and 'No to FTAA,'" said Argentine labor leader Juan Gonzalez. "We don't have any confidence in anything he might propose here. Whatever it is will only prolong hunger, poverty and death in Latin America."


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“Chavez 'Inspired' by Anti-Bush Protesters”
By DAN MOLINSKI, Associated Press Writer
Associated Press – November 4, 2005


MAR DEL PLATA, Argentina - A crowd of 10,000 protesters chanting "Get out Bush!" swarmed the streets of this Argentine resort Friday, hours before the hemisphere's leaders sat down to debate free trade, immigration and job creation.

Before dawn, thousands greeted a train bringing the last group of fellow demonstrators from Buenos Aires, including Bolivian presidential hopeful Evo Morales and soccer great Diego Maradona, who donned a T-shirt accusing President Bush of war crimes.
Chanting "Fascist Bush! You are the terrorist!" the protesters hung from the engine and moved up the sides of the train, trying to shake hands with those inside.

Later, they took to the streets, heading toward a stadium where Venezuelan President Hugo Chavez made a speech before joining the Summit of the Americas.

Chavez arrived early Friday, saying he was "inspired" by the protesters, who also oppose the U.S.-led negotiations to form a Free Trade Area of the Americas stretching from Alaska to Argentina.

"Today the FTAA is dead and we are going to bury it here. We are here to change the course of history," he said after stepping off his plane.

But Mexican President Vicente Fox, one of the region's biggest free trade proponents, told reporters that Venezuela and other nations opposed to the FTAA may be left behind as the rest of the hemisphere considers moving forward on creating a huge free trade zone.

One marcher, Canadian steelworker Dennis Matteau, said free trade must be stopped.

"We have NAFTA, so we know about free trade deals," he said. "They are not good for workers."

The march was mostly peaceful, although some self-proclaimed anarchists spray-painted slogans on a bank. Most businesses along the route had closed, except for a fruit stand protected by a wall of wooden crates.
"So far, I've only lost four bananas," owner Blas Zanghi said.

Shuttling between luxury hotels, Bush met with Argentine President Nestor Kirchner as well as Central American and Andean leaders Friday before joining the 34-nation summit.

Leaders attending the two-day summit agreed ahead of time to focus on creating jobs and reducing poverty. In recent days, however, attention has shifted to the free trade issue and sparring between the United States and Chavez, a leftist whose government has used his country's vast oil wealth on social programs for the poor.

Washington maintains the proposed free trade accord, which has stalled amid opposition by several Latin American countries, is vital to creating jobs and increasing wealth in the region.

Chavez, who regularly claims Washington is trying to overthrow him, has said free trade is being forced on Latin American countries and the deal would only help the rich. Instead, he is promoting anti-FTAA deal based on socialist ideals.

Bush arrived Thursday, the same day Venezuela staged a mock U.S. invasion of its own territory. The event was the latest exercise intended to prepare soldiers and civilian volunteers for what Chavez says is a possible attack by American troops.

U.S. officials deny any such plan.
Chavez and Bush will likely see each other Friday at the summit's inauguration but are not scheduled to meet one-on-one.

Jose Miguel Insulza, secretary-general of the Organization of American States — the Washington-based group that organized the summit — said he was disappointed by the attention given to the free trade deal.

"This is not a summit about the FTAA," a frustrated Insulza told reporters.

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Associated Press writers Nestor Ikeda, Vivian Sequera, and Alan Clendenning in Mar del Plata and Kris Kitto in Buenos Aires contributed to this report.
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On the Net: http://www.summit-americas.org


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November 5, 2005

SouthAmerica: It seems to me that things got very messy in Argentina – People hate this guy it does not matter where he goes – other than Texas.


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“Summit Protests Turn Violent in Argentina”
By BILL CORMIER, Associated Press Writer
Associated Press – November 5, 2005


MAR DEL PLATA, Argentina - More than 1,000 demonstrators angry about President Bush's policies clashed with police, shattered storefronts and torched businesses Friday, marring the inauguration of the Summit of the Americas as leaders began debating creation of one of the world's largest free trade zones.

The chaos reflected the often violent, worldwide debate on free trade as the United States and Mexico pushed to relaunch talks on a zone stretching from Canada to Chile. Past summits on the issue — including last year's gathering of Asian-Pacific leaders in Chile — have drawn bitter opposition and similarly angry protests.

Venezuelan President Hugo Chavez emerged as the most strident opponent of the plan, addressing a separate crowd of more than 10,000 peaceful protesters hours before the summit convened in this normally tranquil seaside resort.

Chavez vowed to defeat the Free Trade Area of the Americas, or FTAA, once and for all. Speaking before a six-story banner of revolutionary Che Guevara, Chavez urged the throng — including soccer great Diego Maradona and Bolivian presidential hopeful Evo Morales — to help him fight free trade.

"Only united can we defeat imperialism and bring our people a better life," he said, adding: "Here, in Mar del Plata, FTAA will be buried!"

Before Chavez's speech, demonstrators flooded the streets, shouting "Get out Bush!" and "Fascist Bush! You are the terrorist!"

Argentine President Nestor Kirchner was critical of the United States during the summit, saying Latin America will no longer tolerate American meddling.

Kirchner said past American policy "not only generated misery and poverty but also a great social tragedy that added to institutional instability in the region, provoking the fall of democratically elected governments."

As leaders inaugurated the two-day summit to work out their differences on free trade, a smaller group of protesters threatened a barricade of riot police, prompting authorities to fire tear gas into the crowd.

The protesters, armed with large wooden clubs, began smashing storefront windows and setting at least one bank on fire just outside the gated summit security zone. One restaurant with anti-Bush posters plastered across its windows was untouched.

Car sirens wailed and residents — including elderly people and children — fled as protesters launched rocks with slingshots and threw sharpened sticks at police. They also set fire to U.S. flags, using them as fuel for bonfires. Officials said 64 people were arrested but there were no injuries in the protests.

Ramon Madrid, a hotel manager, hurriedly closed up. "I don't like Bush, but this is too much. There is no need for violence," Madrid said.

Anti-American protests also turned violent elsewhere as demonstrators attacked U.S. interests in other Argentine cities. Four police officers were injured in Rosario in clashes that followed an attack on a branch of U.S.-based Citibank.

In neighboring Uruguay, hooded protesters chanting anti-Bush slogans attacked a series of bank buildings, shops and shattered windows in an outburst swiftly quelled by riot police. Leftist groups were blamed.

Chavez and protesters argue that free trade is being forced on Latin American countries. He has instead pushed for an anti-FTAA deal based on socialist ideals. He has used Venezuela's oil wealth to push for regional solidarity, offering fuel with preferential financing to various Caribbean and Latin American countries.

Venezuela is a member of the Organization of Petroleum Exporting Countries and is the world's fifth largest oil exporter as well as a major supplier to the U.S. market.

Chavez also regularly claims the United States is trying to overthrow his government, something the U.S. denies.

Joking about his rivalry with Bush, the Venezuelan president has said he might try to sneak up and scare the U.S. president during the summit. When asked how he would react to a close encounter with Chavez, Bush said he would be polite.

"That's what the American people expect their president to do, is to be a polite person," he said. "And if I run across him, I will do just that."

After meeting with Bush, Kirchner made no mention of free trade but said the two had a frank talk about Argentina's struggle to extricate itself from its financial meltdown.

Some 40 percent of Argentina's 36 million people remain in poverty, and many blame trade liberalization for destroying local industries and causing a flood of cheap imports.


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And ironically enough...globalization could very well backfire on the US if the dollar gets cheap enough...

US will get a taste of what is happening to Argentina..

To Bush the perfect concept is to give the full appearance of economic aide..whereas just the opposite is true...

What can happen is that the best US names can get bought out by other countries firms...and the money goes out to the other country...The resources are bought cheap...and the money flow walks away...along with the control...This is exactly how the Bush Admin wants it to happen in the Americas...and has happened in the Americas....and is happening as we speak through CAFTA....

Through Walmart...the US has given the ok for a Chinese buyout...to some degree...globalization has already backfired on the US...as the US thought they owned the game....

Another board contributor offered the following post...and this would be US currency based...Dollar gets cheap..ie to other significant currencies...Some of the US's best multinationals and US based companies will be very very cheap to own...and globalization will only accelerate faster....

Hey..Trust Acct Bush...Halliburton Cheney ...congrats on ruining millions of US and Latin American individuals lives....

Globalization is good....good for who...be specfic..and do not spew out academic theory as an answer...If quick..simple answers cannot be given...then the policy is very suspect....

What is very interesting is how it is truly possble for Trust Acct Bush and Halliburton Cheney to create such an economic nightmare...Such authority should not be given in this manner in the future...The US should change their governing system...to keep this from ever being possible again.........

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Registered: Sep 2005
Posts: 463


11-04-05 10:02 PM

I quote my economic guru: John Rutledge

"There are two developing stories in this regard worth watching. One is the descent of vulture buyers on US manufacturers. The other is the growing equity stake the PBGC is taking in companies after bankruptcy.

The inexorable margin pressure put on American companies by global price arbitrage systematically erodes their ability to service the (pension and health care) liabilities on their balance sheets. This pushes them into bankruptcy court, where these liabilities are transformed into equity securities held by the PBGC, which is becoming the airline owner of last resort in America.

The companies, themselves, fall into the hands of vulture buyers, who operate without the burden of debt service during reorganization. this produces further pressure on prices and margins, further failures, further consolidations.

This pressure is the force keeping inflation and bond yields from rising and what will ultimately break the back of the Fed's current policy. It is not going to go away."

This is probably the next major problem we will face, and will eventually affect the stock market: large companies, overloaded with overpaid unionized workers and huge pension/health care obligations. Would advise checking your portfolio...
 
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November 6, 2005

SouthAmerica: Americans are starting to figure this one out:

“Officials had wanted a foreign policy win to offset domestic criticism that the general hostility abroad to the war in Iraq had damaged America's ability to promote its interests diplomatically.”


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The Guardian - Sunday November 6, 2005

“Rioters shatter Bush's hopes of forging free trade coup”
Violent protests have turned a prestigious foreign policy trip to South America into another public relations catastrophe
By: Paul Harris


President George W Bush was poised for a big new political setback last night as a diplomatic push for a major free trade agreement seemed stalled amid fierce opposition from key countries and scenes of violence and rioting in Argentina and Uruguay.

Bush, who is already beset by a host of domestic political troubles, had hoped for a major foreign policy coup to take some of the pressure off his beleaguered White House. He has put breaking down free trade barriers in the region at the top of the agenda at the Summit of the Americas, which has brought together leaders from 34 different countries in the Argentine city of Mar Del Plata.

But the end of the summit was delayed as talks dragged on inconclusively about a proposed Free Trade Area of the Americas (FTAA). A group of left-leaning countries, headed by Brazil, Venezuela and others, opposed the idea, saying it would open their countries to exploitation by large American firms and do little to alleviate poverty. Bush left the summit before it ended as discussions about whether to adopt a clause scheduling FTAA talks for next year continued past a deadline set for a summit declaration.

Officials said countries were still deeply divided over the issue of setting a date and an opt-out could be included in any final statement. That result is a long way from the clear progress the White House wanted. Officials had wanted a foreign policy win to offset domestic criticism that the general hostility abroad to the war in Iraq had damaged America's ability to promote its interests diplomatically.

Brazilian President Luiz Inacio Lula da Silva said yesterday FTAA discussions should wait until at least after crucial World Trade Organization talks in December on stripping global trade barriers and boosting the world's economy. Venezuela's firebrand president Hugo Chavez was more strident. On Friday night he told a crowd of more than 20,000 protesters that the policy was a branch of American imperialism. 'Only united can we defeat imperialism and bring our people a better life,' he said, adding: 'Here, in Mar del Plata, FTAA will be buried!'

The summit has exposed deep rifts among the region's countries on the issue of free trade. A large group of countries could now push ahead to create a free trade area without major players like Brazil, Argentina and Venezuela. It has also exposed a critical attitude of many leaders have towards Bush, especially with Chavez. Chavez regularly denounces Bush as 'Mr Danger' in speeches and there was much speculation as to whether the two men would meet face-to-face. However, at the traditional leaders' group photo the pair seemed to keep a safe distance from each other.

But it has been less calm on the streets outside. Widespread protests on Friday turned ugly as rioters set a building on fire and hurled objects at police.

Demonstrators, some of them wearing masks, threw Molotov cocktails, set bonfires in the streets with items looted from stores, burned US flags and set a bank ablaze. Police in turn fired tear gas at the crowds and held them back from beaching a tough security cordon set up around the luxury hotel where the summit was being held.

There were also reports of riots in Uruguay where police in riot gear battled protesters who were demonstrating against the summit.
The scenes of violence and protest, which have become common at most meetings of world leaders, prompted Bush to ruefully acknowledge his unpopularity in much of the world outside his own borders. 'It's not easy to host all these countries, particularly not easy to host, perhaps, me,' Bush told his Argentine hosts 'But thank you for doing it.'

After the summit finished Bush flew to Brazil, where he will meet with President da Silva for bilateral talks before heading for two days in Panama. It is a relatively rare trip abroad for the President and comes as his administration seeks to recover from a series of political mis-steps and scandals that have seen Bush's popularity ratings plummet.


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November 6, 2005

SouthAmerica: There were various demonstrations in Brazil against George Bush’s visit.
And some people burned the American flag to protest George Bush’s trip to Brazil.

And some banners said: “Out of Brazil – Bush and its imperialist politics.”


This is the first time in Brazilian history the Brazilian government had to provide so much security for a visiting foreign leader as they have for George W. Bush.

They close all the streets close to the hotel where George W. Bush is staying since last Thursday for security reasons. Dozens of American agents are around the area to protect the American president.

Sharp shooters will be in position all along the area that president Bush and his retinue will travel by.

Two helicopters of the Federal Police, specially trained dogs, American agents of the secret service, an American squadron of anti-bomb and a squadron anti-chemical warfare also will be available during Bush’s visit.

The Brazilian division of intelligence of the Federal Police will monitor all the points in the city where exist the risk of an attack.

The “Operation America” – name given to the set up to protect Bush during his visit – also will include 500 men fron de Federal Police, 100 men from Navy, Army, Airforce, and more than 1,200 men from the Military Police.


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Folha de Sao Paulo – November 5, 2005 – 9:10 PM

“Após participar de cúpula na Argentina, Bush chega ao Brasil”

O presidente americano, George W. Bush, desembarcou no Aeroporto Internacional de Brasília na noite deste sábado, depois de participar da 4ª Cúpula das Américas, que terminou hoje no resort argentino de Mar del Plata.

Sob medidas de segurança inéditas no Brasil, Bush--que faz sua primeira viagem oficial ao país, onde permanecerá menos de 24 horas-- vai se reunir neste domingo com o presidente Luiz Inácio Lula da Silva, para debater uma série de assuntos regionais e internacionais.

O encontro será o primeiro entre Lula e Bush desde junho de 2003, quando o líder brasileiro visitou Washington e foram criados grupos de trabalho bilaterais para fortalecer a cooperação em ciência e tecnologia, educação, saúde, meio ambiente e agricultura, entre outras áreas.

Reunião

Além de uma reunião reservada com Lula, Bush participará de um encontro que contará com a presença, do lado americano, da primeira-dama, Laura Bush, da secretária de Estado, Condoleezza Rice, do assessor para assuntos de segurança nacional, Stephen Hadley, entre outros altos funcionários do governo dos EUA.

Do lado brasileiro, devem participar os ministros Celso Amorim (Relações Exteriores), Dilma Roussef (Casa Civil), Roberto Rodrigues (Agricultura) e Luiz Fernando Furlan (Desenvolvimento), além do Embaixador do Brasil nos EUA, Roberto Abdenur, e do assessor para assuntos internacionais da Presidência, Marco Aurélio Garcia.

Além das questões comerciais, Lula deve reivindicar uma profunda reforma da ONU (Organização das Nações Unidas), que inclua o ingresso do Brasil ao Conselho de Segurança como membro permanente.

Antes de se reunir com Lula, Bush tomará café da manhã com empresários e assistirá a um ato de líderes juvenis. Após a reunião, Bush fará uma palestra no hotel em que ficará hospedado, para uma platéia de convidados.

Os Estados Unidos são o principal destino das exportações do Brasil. O comércio bilateral cresceu 24% em 2004, chegando a uma troca comercial de US$ 31 bilhões, com uma balança comercial ligeiramente favorável aos americanos. O Brasil é o país da região em que os EUA mais investem--cerca de US$ 35 bilhões anuais.

Segurança

A visita de Bush gerou manifestações de grupos de esquerda, que fizeram marchas neste sábado e prometem continuar com os protestos amanhã.

Nos arredores do hotel em que o presidente americano se hospedará com sua comitiva, os acessos estão restritos, e, desde quinta-feira (3), dezenas de agentes dos EUA circulam vestidos à paisana.

Atiradores de elite foram posicionados em pontos estratégicos por onde Bush passará com sua comitiva. Dois helicópteros da Polícia Federal (PF), cães farejadores, agentes do serviço secreto, do esquadrão anti-bombas e do esquadrão contra a guerra química norte-americanos também foram mobilizados para a visita de Bush.

A Divisão de Inteligência da PF vai monitorar pontos da cidade onde supostamente existiriam mais riscos de atentado.

No total, 500 homens da PF, 100 homens da Marinha, Exército e Aeronáutica e cerca de 1.200 homens da PM participam da "Operação América"--nome dado ao esquema de segurança para receber Bush.


Source: http://www1.folha.uol.com.br/folha/brasil/ult96u73721.shtml


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